13 September 2019
Wills – Bequests held on trust
If a beneficiary cannot take their share of the estate until 30 years old, can a parent be the trustee of the money or only the executor?
Secondly, if the will is silent, who bears the cost of the continuing administration until the beneficiary turns 30?
Thank you for the question.
The practical solution would be to ask the parent to accept the bequest as trustee on behalf of the beneficiary and hold the funds in an interest-bearing account until the beneficiary turns 30. The will and the grant of probate serve as the trust documents and there is no requirement to create a separate trust.
If the will does not contain specific instructions as to how the trust funds are to be used or administered, the trustee is bound to act in accordance with the general law, as well as the Trustee Act and other related legislation.
While holding the funds the trustee will need to satisfy the taxation office that the funds are held on trust so that interest earned is not treated as income for the trustee. Depending on the amount of income, the trust may need to lodge an annual tax return. The trustee should seek advice from an accountant in this regard.
All expenditure from the trust must benefit the beneficiary, however reasonable costs of administration can be met from the trust funds.
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